Deutsche Bank : Speech Christian Sewing

Christian Sewing

Chief Executive Officer

Deutsche Bank AG

Annual General Meeting

Frankfurt am Main, 27 May 2021

Text of the speech published in advance on May 19, 2021

The speech delivered during the Annual General Meeting

may deviate from this preliminary manuscript.

Please check against delivery.

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Dear Shareholders,

Ladies and Gentlemen,

I, too, have the pleasure of welcoming you to our virtual Annual General Meeting. This is the fourth time that I'll be reporting to you on the previous financial year. And every year it's a special day for me. As the financial year progresses, I often reflect on what I will say to you at the next AGM. Working towards this day motivates and disciplines us. One thing is clear: what I have to say to you here today on behalf of the entire Management Board has to be the result of long-term planning and hard work. That is what is needed if we are to be credible.

I am especially delighted to be able to stand here today and report to you that our results have improved and we are even more optimistic than in recent years. Not just because we kept our promises to you. Not just because our bank has proven to be even more resilient than many would have thought during the biggest economic slump of the post-war period. And not just because we reported a pre-tax profit of more than 1 billion euros in 2020, started 2021 with the best quarter for seven years and have a dividend for our shareholders in sight again.

No, it is also because there is now much less doubt about the path that we set out on. Concerns about our liquidity levels, our capital base or our strategy are all now no longer an issue. There has been a fundamental change in the way people see our bank, and it is our responsibility to take this growing trust and put it to good use, to achieve sustainable profitability while avoiding setbacks.

When I took on the position of CEO of Deutsche Bank a little more than three years ago, I set out to ensure that our bank refocuses on its strengths and to guide it back to the centre of society. At our AGM in 2018, we set ourselves the ambitious goal of creating a Deutsche Bank that is once again relevant. Relevant for our clients, relevant for our investors and relevant for society. And one thing was always clear: to be relevant we need to be sustainably profitable and convince everyone that our bank is needed. A bank whose employees are once again proud of the organisation they work for.

This all seemed hugely challenging in May 2018.

Three years later, we can say that, when asked about our bank, our employees feel much more proud now than then. There are many reasons for this, but our ongoing improvement and our growing relevance to our clients is a big factor in this shift in morale.

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Let me give you some day-to-day examples of this shift:

• We keep the economy running, processing average daily payment values of more than 800 billion euros across 125 currencies;
• In Germany alone, we grant retail mortgages to finance more than 150,000 homes per year;
• We finance investments in economic progress - so we granted about 40 billion euros in business loans last year;
• We connect companies around the world and settle more than 400,000 trade finance transactions every year.

We have been doing all of this for decades. But we have have been noticing something of late: there is an increasing awareness of what banks are here for and what Deutsche Bank is here for. And day-to-day during the pandemic, we have been dedicated to showing what we are capable of:

• At the worst point of the pandemic, we kept more of our branches open for business than any other bank in Germany, while making sure that we had appropriate safety measures in place.
• We have helped companies navigate the crisis, by setting up a coronavirus helpdesk that answered more than 250,000 queries.
• We helped our clients raise 1.7 trillion euros of debt on the markets last year. That's a record for our bank.
• We were the most active bank in the KfW loan programme, helping our clients gain access to more than 12 billion euros.
• In the 15 months to the end of March this year, we facilitated more than 70 billion euros in sustainable finance and sustainable investments.
• Despite the substantial professional and personal challenges that everyone working at our bank faced, we continued to engage in social initiatives last year, investing almost 52 million euros, supporting almost 13,000 of our staff to volunteer for social projects on about 20,000 days and benefiting more than 3.7 million people through our initiatives.
• In a show of solidarity with our company, numerous senior managers in our bank opted to waive one month's salary. This included all our Management
  Board members who, in addition, waived one-twelfth of their variable compensation. And I would like to mention that our Supervisory Board Chairman Paul Achleitner did exactly the same.

During this same period, we have proven how stable and resilient we are, with comparatively low credit risks and stable capital ratios. And with a return on equity in the most recent quarter that came very close to what we had planned for the coming year.

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The fact that we have managed this is the result of a rigorous transformation that we started at our AGM in 2018, three years ago. And it is the result of hard work, hard work for which I'd like to thank our colleagues around the world most warmly on behalf of the Management Board. What you achieved deserves our utmost respect. This is all the more true because the work during the pandemic demanded a great deal of flexibility and dedication from everyone. A large proportion of our employees still work from home, often looking after their children in parallel. We look forward to their return to the office, but at the same time we will also learn from the coronavirus period and combine time in the office and mobile working more flexibly in the future. This is in line with the wishes of our employees and will save costs in the long run.

I. Review

Three phases of our transformation

If we look at Deutsche Bank's transformation, there are three phases:

The first phase began in 2018 when we laid the foundation for the transformation, a phase of stabilisation, equipping our bank with a strong capital base, less risk on the balance sheet and stricter controls. This foundation was the prerequisite for us even to be able to announce a new strategy, one that we are financing with existing resources.

We then announced this new strategy in July 2019, which marked the start of the second phase of our transformation with the goal of making our bank more profitable, leaner, more innovative and even more resilient. A goal of creating a bank that retains its focus on the needs of its clients and on finally making the bank sustainably profitable for our shareholders. Our promise was simple, but not trivial: we will concentrate on our strengths, cut our costs and reduce our risks, all the time smoothing the way for sustainable profitability.

I knew from the beginning that we would have to execute the lion's share of this transformation during the course of the first six quarters, from mid-2019 to the end of 2020. And that is exactly what we did. At the end of these six quarters, we had already recognised 85 percent of the transformation-related effects that we expected for the period up to 2022.

And so at our Investor Deep Dive last December, we were able to fire the starting gun for our third phase, the phase of sustainable profitability. Our goal is to grow while at the same time maintaining our rigorous discipline with regard to costs and capital.

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What we have achieved

But before I go into more detail I would like to sum up what we have achieved after two phases of our transformation. We believe that eight factors played a crucial part in our success:

• First: concentrating on our strengths is paying off. What are we especially good at? Where do our clients need us the most? Where is it that we are creating the most value, also for you, our shareholders? These questions were key for our transformation. And they mainly concerned our Investment Bank. Consequently, we made the decision to withdraw from equities trading.
  This business has recently performed across our industry and I often get asked if we shouldn't have held onto it. There is a simple and clear answer to that: no. During an economic boom phase all market participants tend to benefit, but the gap between the best and the rest still grows.
  And that is something that we are witnessing, in particular in areas where we are strong, in the Fixed Income & Currency (FIC) business including Financing. Many clients are working even more closely with us today. For six consecutive quarters our Investment Bank has achieved double-digit revenue growth year on year. And almost as importantly: we generally grew quicker than our peers. In a nutshell: we gained market share in important businesses, without deploying any additional capital or staff.
• While the Investment Bank has recently been in the spotlight, we are also making good progress in our other businesses. And that brings me to the second factor for success: we have successfully defied the low interest- rate headwinds. We maintained our revenues, adjusted for exceptional items and exchange rate effects, at their prior-year level in both the Corporate Bank and the Private Bank. This might not sound spectacular but it is an outstanding achievement in an interest-rate environment that caused many of our competitors to shrink, some substantially so.
  Of course, the many years of low interest rates have led to margins continually narrowing. But instead of complaining, we reacted by coming to individual charging agreements, predominantly in our Corporate Bank where charging agreements cover a total of 83 billion euros in deposits, and by giving our clients sound financial advice. In all four quarters last year we saw net inflows into investment products in our Private Bank, totalling 16 billion euros. It also achieved net new client loans of 13 billion euros.